Old Mutual expects wealth management to drive growth in first half

Old Mutual Ltd warned on Monday that its interim earnings may decline, despite strong operational growth, particularly in its wealth management unit.

The Anglo-South African financial services firm guided for basic earnings per share of between 91.3 rand cents and 100.9 cents for the six months that ended June 30, compared to 96.1 cents a year earlier.

Headline EPS is estimated at between 91.6 cents and 101.4 cents from 97.5 cents.

Old Mutual said growth from operations was primarily driven by stronger revenue in wealth management and Old Mutual Investments, supported by a higher average base of assets under management and administration, as well as lower central costs.

Life annual premium equivalent sales for the first half rose 21% to ZAR7.86 billion from ZAR6.47 billion.

Gross flows was up 20% to ZAR128.19 billion from ZAR106.76 billion, primarily driven by strong inflows in wealth management. Gross written premiums rose 2.9% to ZAR14.93 billion from ZAR14.51 billion.

Value of new business rose 32% to ZAR569 million from ZAR432 million, due to higher sales volumes and a more profitable new business mix in wealth management, Old Mutual Corporate and Old Mutual Africa Regions, despite lower guaranteed annuity volumes in personal finance.

Despite the elevated catastrophe losses during the period, Old Mutual said the net underwriting margin in Old Mutual Insure remained at the upper-end of the medium-term target range of 5% and 8%.

Old Mutual plans to release its interim financial results on Tuesday next week.

Shares in Old Mutual were down 1.6% to ZAR12.56 on Monday morning in Johannesburg.

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